How to Market Test your Product or Service
How will you feel when you spend months of pain and sweat to open your business and suddenly you find out that nobody is interested into your product than what you anticipated? What will you do? Keep carrying on and hope things will get better soon as your customers will get used to you? For how long will you carry on? Many new businesses fail before they could even start because their creators failed to identify an unmet need in the market and verify the viability of their concepts beforehand. Your time and money are extremely valuable to you. You can’t afford to waste them by investing them in producing a product or service that fails in the marketplace. The more you test your product before you produce and sell it, the more likely you are to earn the sales and profits that you desire.
Will your new idea take off where you are trying to establish your business?
The biggest barrier facing young entrepreneurs is new ideas. It’s hard for them to come up with something new, evaluate it and spot the realistic potential for profit in this market. That’s why we see so few genuine innovations in Africa. Put your idea through its paces with this common-sense, six-step process. (Ruthlessness is called for: being your own worst critic at this time could save you years of heartache and mountains of cash.)
Caring about this Issue
You need to care about the problem you are going to solve, and there has to be a sizeable number of other people who also care. How well does your product or service converge and intersect with issues that other people care about?
Size does matter
Make sure the market is big enough. (This is of particular relevance here, in one of the world’s mostly populated countries.) Consider these factors when determining your market size:
- Volume of customers needed to cover costs: high or low?
- Product: Necessity or luxury?
- Frequency of purchase: once-off or recurring?
- Price sensitivity of target customers: are they penny pinchers?
- Cost of acquiring each new customer: not just money, but time too.
Ideally, you want a high volume of price insensitive customers living and working within a small geographical space, who are happy to regularly buy from you without you having to spend a fortune to encourage them to do so. Be extremely careful of any business idea if it cannot fulfill this criterion.
Fix obvious problems
Your product or service has to solve a pain that your market know it has. People do not pay money to solve problems they don’t even know they have. You’ve got to solve glaringly obvious problems.
For example, at least one third of adults in South Africa are suffering from heart conditions and obesity brought about by poor diet. And yet, the healthy lifestyle industry is pretty modest, in big cities, and non-existent anywhere else. You would think that with so many overweight people, there would be more gyms, more vegetarian restaurants, more dieticians, more weight-loss communities. That’s what you would think.
But you see, people are only willing to pay money to solve problems which are admitted. (Until we admit we are fat, businesses geared to address this problem will continue to struggle.)
Offer a better solution
Your solution must be two things: different and better. Being different, on its own, isn’t enough. You also need to be in the firm possession of advantages which make you better too. Faster. Enhanced quality. Superior product knowledge. Higher levels of customer service. More distribution channels. These are qualities which improve the experience you give to the paying customer. They make you different and better.
So do not confuse different and better with cheaper. Locking yourself in a never-ending price war is a recipe for an unhappy life. Don’t do it.
Talk to people about your idea
But don’t talk to everyone. Only the type of folks who will fit into your future target market. You see, if you hold a big community meeting with a bunch of irrelevant individuals, you’ll end up with sloppy market research results. There’s no point in getting advice from those who simply do not matter.
What does your perfect customer look like? Who will benefit the most from your new product? Find that guy and talk to him in detail. You don’t have to listen to anyone else.
Get smart online
Using Facebook? You should be. Leave comments on groups where your target audience is hanging out. Create a small nucleus of followers who will go on and act as evangelists for your brand. If your idea is not something which easily spreads, or creates conversation, or causes people to remark, then think carefully about whether this is the type of business you want to devote your life to right now.